Consumer group Which? could be stripped of its right to lodge super-complaints with the FCA after a group of advisers lambasted the consumer champion over alleged conflicts of interest, the Treasury has admitted.
The advisers claimed that Which? is part-funded by a number of associated companies, including one leading protection intermediary.
A spokesman for the Treasury said it reserved the right to review the designation of any organisation, although the consumer association arm of Which? had last met the requirements in December 2013.
The spokesman said: "Like any organisation the consumer association had to prove to the Treasury that its trading arm, Which? Financial Services, did not control the operations of the part of the organisation seeking super-complaints status.
"The consumer association met the criteria as set out in the application guidance and must inform the Treasury of any material changes that might impact on its status. The Treasury reserves the right to review the designation of any organisation."
Super-complaint status within financial services was awarded to Which?, the Consumer Council Northern Ireland, Citizens Advice and the Federation of Small Businesses in December last year giving them the power to present complaints to the FCA if they believe there are features of a financial services market that have, or could, significantly damage the interests of consumers.
The regulator is then statutorily bound to investigate and must respond within 90 days.
The Treasury's statement came in direct response to a challenge made by Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, who claimed Which? could not be trusted to lodge financial services complaints "without bias" given that it is funded by several commercial ventures including Which? Mortgage Advisers, Which? Annuity advisers and income generated through protection sales referred to LifeSearch.
Mr Sinclair, who has the full backing of the AMI board including representatives from Legal & General, Countrywide, Sesame and Intrinsic, also claimed Which? Mortgage Advisers, part of the financial services arm, received client referrals from the consumer association.
He said this "muddying of the waters" called into question whether the consumer association could be called independent from the financial services business.
Mr Sinclair said: "We do not believe the conflicts of interest are adequately managed at Which?. In the mind of the consumer there is no division.
"Fundamentally they are allegedly representing the consumer's interests but how is that possible when they are dependent on commercial interests including selling mortgages and protection to consumers?"
Mr Sinclair said Which? must decide if it is a wholly commercial firm and withdraw from its advocacy or split the consumer association from the financial services business.
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